Mylan Eyes Injectables Dominance with $1.6B+ Agila Buy

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Mylan will acquire Indian-owned Agila Specialties from Strides Arcolab for $1.6 billion-plus, in a deal that transforms the drug development firm into a top-tier producer of injectables, with a new presence in high-growth emerging markets.

The deal, announced late yesterday, marries Mylan's existing injectables platform of more than 500 products sold globally—including 55 ANDAs—and its sterile manufacturing facilities in Ireland and India with Agila’s global pipeline of approximately 350 filings pending approval, including 122 ANDAs pending FDA approval, and nine manufacturing sites—six in India, two in Brazil, and the other in Poland.

Agila recorded 2012 sales of $255 million, and earnings before interest, taxes, depreciation, and amortization (EBITDA) of $86 million.

Mylan hopes to emerge as a key player in the global generic injectables market, which according to IMS figures and an internal analysis by the company is projected to grow at a compound annual growth rate of 13% from 2011–2017, outpacing most other dosage forms, as the patent cliff drives down sales of branded drugs.

According to Mylan, the combined Mylan/Agila portfolio will represent approximately 70% of regulated market demand for injectables, while the combined R&D platform and manufacturing capabilities are expected to position the new company as a leader in advanced new technologies the company hopes will drive future growth.

“The addition of Agila to our existing injectables platform will immediately create a new, powerful global leader in this fast-growing, attractive market segment and accelerate our target of becoming a top-three global player in injectables,” Mylan CEO Heather Bresch said in a statement. “The acquisition of this unique asset delivers on several of Mylan's strategic growth drivers by further expanding and diversifying our product portfolio and geographic reach, strengthening our presence in the institutional channel, and positioning us to maximize our generic biologics portfolio.”

The deal also helps fulfill Bresch’s commitment, expressed last year, that Mylan grow in part through acquisitions. During a conference call with analysts, Bresch said Mylan is considering acquiring other companies among options, according to news reports quoting her as saying: “We’re looking at lots of things.”

For Agila, the acquisition by Mylan ends months of speculation about its future, with Bloomberg reporting in August that Agila may be on the block, and on January 14 that Pfizer was considering buying the Indian injectables maker. Japanese-owned Otsuka has also been speculated to be a suitor for Agila.

In addition to the $1.6 billion cash, Mylan agreed to pay Strides up to an additional $250 million in potential payments tied to undisclosed conditions as part of the deal.

Mylan said it will not assume any outstanding debt or acquiring the business's cash in connection with the planned acquisition. Instead, the company has obtained a commitment letter from its financial advisor in the deal, Morgan Stanley, for a new $1 billion senior unsecured bridge term loan. “This bridge, together with internal sources, including available cash and existing lines of credit, is expected to be sufficient to finance the transaction,” Mylan said in the statement.

Strides said it would return $700 million to $800 million of pre-tax proceeds from the deal back to its own shareholders, In its own statement announcing the deal.